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Petitioner: MESSRS. PAKISTAN INDUSTRIES LTD. VS Respondent: THE PROVINCE OF SIND
P L D 1955 Sind 219
P L D 1955 Sind 219
(Original Civil Jurisdiction)
Before Muhammad Bachal, J
MESSRS. PAKISTAN INDUSTRIES LTD.‑--Plaintiffs
versus
THE PROVINCE OF SIND ‑--Defendants
Suit No. 890 of 1951, decided on 1st September, 1954.
(a) Sind Sales Tax Act, 1947, S. 18‑"Any tax payable" means tax which is liable to be paid whether assessed and ascertained or not.
Before the tax had been assessed for a certain quarter, the business was transferred by sale. The transferee was liable to pay though the tax had not been assessed and ascertained before the transfer.
(b) Sind Sales Tax Act, 1947 S. 20‑Bars maintenance of civil suit in respect of matters within jurisdiction of assessing authority.
Since effective and appropriate machinery had been provided by the Sind Sales Tax Act for raising points urged in the civil suit contesting plaintiffs' liability to pay the tax, the suit was held not to be maintainable.
The Civil Court can interfere only if the allegation is that fraud was practised or the Tribunal was not lawfully constituted or it had no territorial or fiscal jurisdiction, or such other questions which affect its jurisdiction arise, but regarding matters within its jurisdiction a suit does not lie.
Qadir‑ud‑din, for Plaintiffs.
Fazle Illahi, for Defendants.
JUDGMENT
MUHAMMAD BACHAL, J.--‑The plaintiffs have filed this suit against the Province of Sind for a declaration that they are not liable to pay Rs. 6,250 sales‑tax, the assessment being ultra vires, illegal and void and an injunction restraining the defendants from recovering this amount.
The plaint states that on 22nd May, 1948 the plaintiffs purchased from one Diwanchand Murlidhar their ready stock of goods by making payment of Rs. 98,068 in cash against delivery of goods and not the business of sellers. But they have been wrongly and illegally assessed to Sales‑Tax Rs. 6,250 due from the sellers for the period ending 31st March 1948. They filed a revision application under section 22 Sind Sales ?Tax Act, but it was rejected. Hence they prayed for the above reliefs.
The defendant contended that the plaintiffs were transferees from Messrs. Diwanchand Murlidhar within the meaning of section 18, Sind Sales‑Tax Act 1947 and that the suit was barred by section 80 Sind Sales‑Tax Act, section 226 Government of India Act and section 56 Specific Relief Act.
The following issues were raised :‑
(1) Is the assessment and demand of sales‑tax department ultra vires, illegal and void ?
(2) Was any sales‑tax payable and did it remain unpaid by Messrs. Diwanchand Murlidhar and is any sales‑tax payable by plaintiffs on account of the sales made by Messrs. Diwanchand Murlidhar. Was the entire business of Messrs. Diwanchand Murlidhar transferred to the plaintiffs ?
(3) Is the order on the Revision Petition filed by the plaintiffs under Sales‑Tax Act 1947 illegal ? If so, what is its effect ?
(4) Is the relief regarding injunction barred by section 56 of the Specific Relief Act ?
(5) Is the suit barred by section 20 of Sind Sales‑Tax Act and also by section 226 of the Government of India Act ?
(6) To what relief, if any, are the plaintiffs entitled ?
My findings are as follows :‑
Issue No. 1 : No.????????????????????????????????????????????????????????? Issue No. 2. Yes.
Issue No. 3 : No.????????????????????????????????????????????????????????? Issue No. 4 : Does not arise.
Issue No. 5 (a) : Yes.?????????????????????????????????????????????????????????????? (b) Not necessary.
Issues No. 6 : Suit dismissed with costs.
Reasons
Issue Nos. 1 and 2.‑--On 26th December 1950 the Commis?sioner of Sales‑Tax by notice under section 11 of the Sind Sales‑Tax Act 1947, hereinafter referred to as the Act, required Messrs Diwanchand Murlidhar & Sons, a registered dealer, to appear on 11th January 1951, and submit return for the quarter ending 31st March, 1948. It was reported that the dealer had since sold away his business and migrated. The amended notice was served on transferees on 8th January, 1951. Mr. Menghani attended and stated that he had purchased the stocks of the Hindu dealer for Rs. 980,68 and produced a receipt for this amount and a list showing the details of the stock purchased by him. By an assessment order dated 18th January, 1951 the Sales‑Tax Officer ordered a demand notice on the, plaintiffs (transferees) for Rs. 6,250 due by the transferors. By a notice of demand dated 22nd January, 1951 under section 12 of the Act the plaintiffs were directed to pay Rs. 6,250 by 23rd February 1951. The notice stated that if they intended to appeal against the order of assessment, they may present an appeal to the Deputy Commissioner of Sales‑Tax, Karachi, under section 21 of the Act. The plain tiffs filed a revision application under section 22 of the Act. But it was rejected on the ground that an appeal had not been filed in the first instance.
Mr. Qadir‑ud‑din for the plaintiffs argued that rule 28 of the Sind Sales‑Tax Act Rules, requires the Commissioner to fix a date in the notice under section 11 of the Act ordinarily not less than 30 days after the date of the issue of notice. The plaintiffs appeared before the Sales‑Tax Officer. But this point was neither raised before him nor in the plaint. It cannot now be raised before this Court.
Mr. Qadir‑ud‑din next argued that section 18 of the Act under which the plaintiffs were made to pay the tax, was not applicable to the purchase made by the plaintiffs. The Act came into force from 1st November, 1947 and all sales made after that date will be taxable whether the dealer has regis?tered himself or not. Dealer under section 2 (c) of the Act means any person who carried on the business of selling or supplying goods in the Province. Section 10 of the Act provides that every dealer may be required to furnish returns. Section 11 (4) of the Act provides that if a registered dealer does not furnish returns' the Commissioner shall, after giving the dealer a reasonable opportunity of being heard, assess to the best of his judgment, the amount of tax, if any, due from the dealer. Section 14 of the Act provides that every registered dealer and every other dealer on whom a notice has been served to furnish returns under subsection (1) of section 10 shall keep a true acccount of the value of goods bought and sold by him. Section 18 of the Act provides as follows :‑
"When the ownership of the business of a registered dealer is entirely transferred, any tax payable in respect of such business and remaining unpaid at the time of the transfer shall be payable by the transferee as if he were the registered dealer ; and the transferee shall within thirty days of the transfer apply for registration under section 8 ".
Section 19 of the Act lays down the power of the Commis?sioner to determine the question whether any person is a dealer or any tax is payable in respect of any particular sale. It is open to the assessing officer to make an assessment simply in the exercise of his best judgment. The contention that the expression "any tax payable in respect of such business and remaining unpaid" in section 18 means tax which has already been assessed and the amount ascertained or determined and remaining outstanding or unpaid and not tax which has not been assessed at the time of or before the transfer, is based on a misconception of the scheme of the Act. Under this section and section 5 if the liability to pay the tax is there and such liability remains unsatisfied, then the transferee is liable to pay such tax ; whether ascertain?ment or assessment was made or not. None of the points raised by Mr. Qadir‑ud‑din has any validity.
Issue Nos. 3 and 5.‑Section 21 (1) runs thus :‑
"Within sixty days from the making of an order of assess?ment either with or without penalty or the passing of any other order under this Act, any dealer may in the prescribed manner, appeal to the prescribed authority against such assessment or other order."
Section 22 provides that the Commissioner may revise any order and the Tribunal may revise the Commissioner's order. Section 23 runs as follows :‑
"Within sixty days from the passing by the Tribunal of any order under subsection (2) of section 21 or subsection (1) of section 22 effecting any liability of any dealer to pay tax under this Act, such dealer or the Commissioner may, by application in writing accompanied where the application is made by a dealer by a fee of one hundred rupees, require the Tribunal to refer to the Chief Court any question of law arising out of such order, and where the Tribunal agrees it shall draw up a statement of the case and refer it to the Chief Court."
Section 20 provides
"Save as is provided in section 23, no assessment made and no order passed under this Act or the rules made there?under by the Commissioner or any person appointed under section 3 to assist him shall be called into question in any Civil Court, and save as is provided in section 21 no appeal or application for revision shall lie against any such assessment or order."
Mr. Qadir‑ud‑din argued that these sections do not enable a transferee under section 18 to raise the points urged by him here before the Sales‑Tax authorities In Raleigh Investment Co Ltd. v. the Governor‑General in Council (A I R 1947 P C 78 = P L D 1947 P C 19) their Lordships of the Privy Council in construing section 67, Income‑Tax Act observed:
"The presence of such machinery, though by no means conclusive, marches with a construction of the section which denies an alternative jurisdiction to enquire into the same subject matter. The absence of such machinery would greatly assist the appellant on the question of construction."
In my opinion the above sections did give the plaintiffs, the right effectively to raise the points urged by him here. When the Sales‑Tax Officer determined under section 19 that the plaintiffs were dealers liable to pay tax under section 18, it was open to the plaintiffs who were dealers, to appeal against the assessment under section 21 to which their attention was drawn in the demand notice dated 21st January, 1951. The question whether an appeal is competent or whether a party has locus standi to prefer it are all matters for the decision of the appellate Court so constituted. If they are dissatisfied with the decision on appeal, they could ask for a case to be stated on a question of law for the opinion of the Chief Court under section 23. The question whether the assessment notice dated 26th December, 1950 served on the plaintiffs, transferees and the demand notice dated 18th January, 1951 were valid and legal and the question whether there was any evidence to justify the finding under section 19 that the plaintiffs were dealers and liable to pay tax under section 18, are questions of law within the meaning of section 21. As observed by their Lordships of the Privy Council in the above case the obvious meaning and the correct meaning of the phrase" assessment made under the Act" is an assessment finding its origin in an activity of the assessing officer acting as such. As pointed out by their Lordships of the Privy Council in the leading case Colonial Bank of Australia v. Willen ((1874) L R 5 P C 417) "where an order of quasi‑judicial body is objected to before a Court, it is to be seen whether the objection relates to a defect of jurisdiction founded on the character and constitution of the Tribunal, the nature of the‑subject‑matter of the inquiry or the absence of some preliminary proceeding which was necessary to give jurisdic?tion to it." If any of these things is established the order is coram non judica and of no effect whatsoever. If however "the objection rests solely on the ground that the Tribunal has erroneously founded a fact which it was competent to try the objection cannot be entertained." The Civil Court can interfere only if the allegation is that fraud was practised or it was not lawfully constituted or it had no territorial or fiscal jurisdiction, or such other questions which affect its jurisdic?tion arise, but regarding matters within its jurisdiction a suit does not lie. As I have come to the conclusion that effective and appropriate machinery is provided by the Act for raising the points urged in this case, section 20 bars the maintenance of the suit. Finding on the effect of section 226 of the Government of India Act is not necessary:
Issue No. 4.‑--Finding on this issue does not arise, as the tax has since been paid and the plaintiffs have not prayed for refund.
Issue No. 6.‑--The result is that the suit is not maintain?able and is dismissed with costs.
A. H.??????????????????????????????????????????????????????????????????????????????????????????????????? Suit dismissed?.